News, ideas and a software CEO's thoughts from 25 years in the industry.

The Value of Leveraging Your Supply Chain

A recent article in APICS Magazine notes that organizations sometimes fail to leverage the power of their supply chain, despite the fact that effective supply chain management has been shown to improve overall organizational efficiency, heighten effectiveness, reduce costs, streamline material and information flows, boost margins and ROI and improve competitive advantage.

Why? They suggest maybe it’s because too many believe it to be a “back office function” that is merely a cost center and a necessary evil, thus rendering the results invisible. But this couldn’t be further from the truth notes Gary Smith, VP of Logistics for New York City Transit, and an APICS certified CFPIM. Indeed, he notes, the very visible benefits are plainly apparent when you look at a company like Amazon, which you can bet thinks very deeply about its supply chain – so it’s customers don’t have to.

The article goes on to note three barriers that often prevent supply chain management from being seen as valuable:

Supply chains are far from being optimized tactically, and there continues to be a lack of aware of the value they can bring to organizations.

Supply chain management is not considered strategic. In fact, delivery and procurement ought to be a part of every organization’s strategic planning process. It’s a strategic investment.

The necessary decision support tools including warehouse management, forecasting, advanced planning and scheduling and procurement optimization can actually help automate – and improve — many of the routine decisions otherwise made (with great fallibility) by humans.

These automation tools in turn enable teams to make choices faster, with better results, so that people can “focus on the issues that can halt operations and add tremendously to costs,” notes Smith.

It’s an investment – in tools, staff, training and the application of best practices. But it’s an investment with a return that will keep on giving as you automate what can be automated and leave your most important asset – your people – free to work on harvesting the remaining, truly value-laden (and oftentimes, higher-hanging) fruit.